Mad Paws spent $3 million to acquire a dog treat and toy subscription service

Pet care service Mad Paws (ASX:MPA) has made its first acquisition since its ASX listing in March – in pet treats and toys subscription business ‘Waggly’.

Mad Paws is paying $3 million for the acquisition, $2 million in cash and $1 million in shares.

Waggly was launched in 2016 and provides monthly subscription boxes with dog treats and toys – tailored to a dog’s age, chewing needs and size. It has grown to $1.5 million in revenue in FY21.

Mad Paws also offers a pet food subscription service “Mad Paws Dinner Bowl” which focuses on healthier food as well as a pet sitting service and pet insurance offering.

“A perfect match”

Speaking with Stockhead this afternoon, Mad Paws co-founder Justus Hammer said the acquisition felt like a no-brainer for his company.

“It felt like a perfect match from the beginning in terms of a subscription business, we met Kate and there was a mutual understanding on what we wanted to build, where we wanted to take the business and how we think about putting the joy of pets first,” he said.

“Then it was about can we sign a deal that works for us and I think it came to a great result for them and us.”

Waggly Founder and CEO Kate Herbert also endorsed the deal.

“It just felt early on like such a great match, it just felt right since we started talking to each other. So, it’s a true privilege and I’m thrilled today to be sitting here having the acquisition gone through and securing our future together,” she told Stockhead.

Mad Paws also released a trading update in which it revealed it signed on 10,000 new customers in May, taking it over the 100,000 mark. In relation to pet care and walking services, it saw 400 per cent growth from pre-COVID levels.

Mad Paws shares rose by as much as 12 per cent today after news of the acquisition and the trading update.

Mad Paws (ASX:MPA) share price chart

Mad Paws hints at further acquisitions

Hammer told Stockhead there might be more acquisitions to come from Mad Paws.

“We’re always looking to see what fits into the ecosystem that we want to build and whether it makes more sense to build or buy,” he said.

Hammer said his company was focused at getting a foot in the door at all stages of a pet’s lifecycle but the first stage (finding a pet from a breeder and a pet’s infanthood) was a high priority.

“There’s a couple of companies doing some interesting things in that space – and that was one of the things that attracted us to Waggly because over 50 per cent of our customers were puppies,” he said.

“But then in terms of other acquisitions and what we’re looking at there are interesting opportunities in the pet vet space particularly online vet services, home vet services – that’s an area we’re having a closer look at what we’re going to do there.”